Is Sui deflationary?

For a cryptocurrency to be deflationary, its circulating supply must decrease over time.

To determine this, we need to examine three key factors:

• Is there a maximum supply?

• Is there a burn mechanism?

• What’s the emission rate?

So, can Sui be deflationary? Let’s find out!

Does Sui have a maximum supply?

Sui has a maximum supply of 10 billion tokens—no more can ever exist.

This supply cap is important because it prevents endless inflation. In contrast, blockchains like Aptos and Solana have no maximum supply, meaning their token issuance continues indefinitely. For these networks to be deflationary, their burn mechanisms must consistently remove more tokens than are created.

With Sui’s fixed supply, the next question is whether Sui has a way to reduce circulating tokens over time.

Does Sui have a burn mechanism?

A common way to reduce supply is through burning, where tokens are sent to an inaccessible address, permanently removing them from circulation.

While Sui doesn’t burn tokens, its storage fund serves a similar function by temporarily reducing the circulating supply.

Sui’s gas fees have two components:

• Computation fees → Cover the cost of transactions and network usage.

• Storage fees → Paid upfront to store data on-chain indefinitely.

Why does Sui have a storage fund?

New validators must store all past Sui state activity, even events that happened before they joined. 

To ensure long-term storage costs are covered, the storage fund stakes tokens, and its staking rewards are distributed to validators.

Does this have a deflationary effect?

Yes, in two ways.

• Every transaction on Sui directs a portion of the gas fees to the storage fund, temporarily reducing the circulating supply.

• After validators receive their staking rewards, the remaining rewards are reinvested into the storage fund, further locking up tokens and adding deflationary pressure.

Are these tokens permanently out of circulation?

Storage fees are divided into rebateable and non-rebateable amounts. 

The non-rebateable portion remains permanently locked, ensuring long-term storage sustainability. 

The rebateable portion can be returned to users if they remove their stored data, reintroducing those tokens into the circulating supply.

What’s Sui's emission rate?

To determine whether Sui can be deflationary, we need to examine how many tokens are being added versus removed from circulation.

Sui still faces significant inflationary pressure, with 7 billion SUI (70% of the total supply) yet to be released. According to the token schedule, an additional 1.79 billion SUI will enter circulation by 2030.

Although data on how many tokens are being removed via the storage fund is limited, we can still analyze publicly available gas fee data.

Suivision tracks daily and total gas fees collected by the Sui protocol, with records available until September 19, 2024.

From these two datasets, we can estimate that Sui may experience occasional deflationary days as network activity grows. This is more likely after May 2026, when the release of new tokens slows, potentially resulting in more tokens being locked in the storage fund than entering circulation.

Can Sui become deflationary?

• Sui has a maximum supply of 10 billion tokens.

• Sui lacks a traditional burn mechanism but features a storage fund that temporarily removes tokens from circulation.

• Sui still has significant inflationary pressure, with most of its supply yet to be released.

Based on these factors, Sui could become deflationary in the future, but that shift will take time. With the upcoming Mysticeti V2 upgrade and Walrus soon launching its mainnet, Sui is poised for further adoption and higher transaction volume.

Even when it does, at best, Sui would be semi-deflationary or pseudo-deflationary—as storage fund tokens can still return to circulation if users delete obsolete data.

We recognize that some may not consider this deflationary since tokens can be reclaimed. That’s a valid perspective—it ultimately depends on how you define deflation.

If you enjoyed this article, we think you'll like these too.

• What is Sui?
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• Walrus timeline

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This article is intended for educational and informational purposes only and should not be considered as financial advice.